The Reserve Bank of Malawi (RBM) has stated that the recent withdrawal of foreign aid by the US government is worsening financial stress on Malawi.

This development follows a decision by the U.S. government to freeze all foreign assistance, including funding from the United States Agency for International Development (USAID), which has been a significant contributor to Malawi’s budget.

RBM Director of Financial Markets, Chakudza Linje, said the government is now compelled to take over the funding of projects that were previously supported by USAID, further straining the national budget.

Linje made the remarks in Blantyre during the Monetary Policy Technical Forum, where the central bank announced its decision to maintain the policy rate at 26 percent.

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI), through its Director of Business Environment, Lucky Mfungwe, commended RBM for maintaining the policy rate.

However, he urged the government to prioritize increasing productivity, particularly by investing more in the agriculture sector, as a means of reviving the country’s economy.